Minnesota Rep. Erik Paulsen is calling for more oversight of insurance giant AIG. Paulsen, a Republican representing the 3rd Congressional District, says both the Bush and Obama administrations dropped the ball by allowing bonus payments to AIG executives to go forward after the company received taxpayer bailout funds.

The head of AIG, in a hearing before a subcommittee of the House Financial Services Committee, announced plans to ask executives to return all or part of the bonuses, which total $165 million.

CEO Edward Liddy said he would ask those who got bonuses of $100,000 or more to return at least half of those payments.

Paulsen, who sits on the committee, says just asking for the bonuses back does not go far enough.

"But also ask the treasury secretary to say, we won't be releasing any more bailout funds for AIG until this bonus situation is taken care of. So I think he has tremendous leverage, about $30 billion worth of leverage, before that next installment is made, to ask for the return of the money."

Paulsen co-sponsored a bill in the House that would have demanded the bonus money back within two weeks. The measure was voted down.

U.S. Rep. Keith Ellison, a Minnesota Democrat, also sits on the Financial Services committee. He said the anger reached a boiling point during today's hearing.

Ellison said AIG employees should not receive the bonuses if they were based on job performance, because the company has lost so much money.

Liddy, the AIG chairman, said the company and the government should pay the bonuses because they are part of legally binding contracts. Ellison said suggested the government find a way to legally break those contracts.

"If there is a legally binding claim, the U.S. should honor it. But if there are some areas where we can question some facts around performance, the U.S. government has an obligation to make our case," said Ellison.

Ellison said he does not support Rep. Paulsen's bill to force the return of the bonuses within two weeks. He said Congress and the administration should proceed in a rational way.

"You can't govern from anger. You have to absorb how people are feeling, but then discharge your responsibility in a prudent way. I think that's what we should do," said Ellison.

Republican Rep. Michele Bachmann of Minnesota's 6th District also sits on the House Financial Services Committee. She called on the Obama administration to let AIG fail if the company requires any more public subsidy.

"This is $173 billion-plus that we have invested, it's a black hole. I don't think that the American taxpayer should have to pony up any more money for a failed enterprise like AIG."

Bachmann says officials in Washington should do whatever they can to get back the bonuses paid out to AIG executives.